When the State of Israel was founded on May 14, 1948 it inherited the British-model unwritten constitution, which it has been slowly replacing with a written constitution. For a variety of political and ideological reasons the first Knesset – Israeli Parliament – decided that the written constitution would be passed chapter by chapter. Till now the Knesset has enacted eleven Basic Laws, which comprise the existing partial written constitution. The early Basic Laws established the branches of government (executive branch, parliament and courts), basic state institutions, such as the president and army and basic elements of democracy, such as elections. In 1992, the Knesset passed two important Basic Laws: the Basic Law: Human Dignity and Freedom and the Basic Law: Freedom of Occupation. The Basic Laws not only set out constitutional rights but also include entrenchment clauses, which make it difficult for the Knesset to abolish rights and also enable courts to declare statutes “unconstitutional”. This was considered a constitutional revolution and a significant departure from the British model of parliamentary supremacy to the American model of constitutional supremacy.

The Basic Law: Human Dignity and Freedom specifically guarantees the rights to human dignity, life, property, freedom of movement and privacy. The right to human dignity has been broadly interpreted to provide an additional array of rights and liberties, including equality, freedom of association, the right to equal opportunity at the work place and other social rights.

Constitutional rights are not absolute and may be limited by primary legislation, which furthers the values of the State of Israel and is intended for a proper purpose. Moreover, such legislations must also meet the proportionality test. This means a balancing of the various constitutional rights. The Basic Law: Human Dignity and Freedom do not have the power to nullify or alter laws enacted prior to its’ enactment but such statutes are to be interpreted in light of the Basic Law.

The Basic Law: Freedom of Occupation makes freedom of occupation a constitutional right. This has been held by the Supreme Court to restrict unreasonable or not proportionate legislation to limit people from doing certain types of work, such as a real estate agent or importer of non-kosher food. A recent landmark judgment of the National Labour Court held that covenants not to compete were not enforceable unless the worker revealed trade secrets to his new employer. This judgment emphasized the constitutional right of freedom of occupation, freedom of movement for workers and their right to chose their workplace. 1

The Government

The government, which is the executive branch, is compromised of a Prime Minister and Cabinet Ministers, whose authorities, obligations, and election process are all regulated by the Basic Law: Government.

Until the 1996 elections voting was for political parties’ Knesset list, with the party receiving the most members proposing a coalition headed by a Prime Minister of that party. Since 1996 the vote was split, with a separate ballot for the Knesset members and a direct election of the Prime Minister. Prior to the 1996 elections, the Basic Law: Government was reformed and a direct election method was enacted. The two-ballot election process was not successful and the Knesset passed a law reverting back to the one ballot system, which is the method to be used in the scheduled 2003 election.

The Prime Minister and the Knesset are elected for four-year terms, but both have the power to force new elections. Cabinet members are appointed and dismissed by the Prime Minister.

The Head of State

The Head of State in Israel is the President, elected by the Knesset for a single seven year term. This position is mainly ceremonial and the President signs all laws enacted by the Knesset and international treaties, which have been approved by the Knesset. In addition, he swears in judges and has the authority to pardon felons and reduce prison sentences.

The Knesset can remove the President from office with a majority vote of eighty Knesset members. In the event that the President cannot fulfill his/her duties, he is replaced by the Chairperson of the Knesset.

The Knesset, the Israeli legislature, derives its authority from The Basic Law: The Knesset, which regulates its’ composition, election processes, and authorities. Knesset members are elected for four year terms on the basis of general, national, secret, and proportional elections.

As a rule, laws are passed in the Knesset on the basis of the majority of members present at the time of the vote. Certain issues demand a special majority such as the alteration or abolition of some Basic Laws.

Prior to the enactment of a law, it must pass a preliminary process. If the government or one of the Knesset committees submits the proposed law, it must pass two initial votes in the Knesset prior to the third and final vote. If a Knesset member submits a private proposal, it must be approved by the Chairperson of the Knesset and must also pass a preliminary vote, which sends it to the relevant Knesset committee to be prepared for the first and second vote.

The Judiciary

The judicial branch, which receives its’ authority from the Basic Law: Judiciary, consists of the general court system, labour courts and religious courts. The general system and the Labour courts are administered by the Courts Authority, which is supervised by the Minister of Justice and the President of the Supreme Court. The general courts have three levels: the Magistrate Courts, which are trial courts, the District Courts, which hear both trials and appeals and the Supreme Court, which hears appeals and acts as the High Court of Justice. The latter hears constitutional cases, protects individuals from government actions and co-ordinates the court systems. Family Courts are a department of the Magistrates Courts and Administrative Courts are part of the District Courts. The Labour Courts have two levels: the trial level are the Regional Labour Courts and the appeal level is the National Labour Court.

Judges are appointed by a committee of three Supreme Court justices, the Minister of Justice, another minister, two Knesset members and two members of the Bar Association. Their appointment continues until they reach the compulsory retirement age of 70.

Key figures

Israel’s population in 2001 was 6,496,600, with a Jewish majority and a Moslem, Christian and Druze minority of about 1,226,100. The civilian labor force was approximately 2,500,000, which is 55% of the population 15 years or older. There was about 200,000 migrant workers, mainly from the Far East and Eastern Europe. The average monthly wage per worker was approximately US $1,500.2

II. LABOUR REGULATION

General

Employment relations in Israel are regulated by a number of sources: constitutional rights, as determined by the Basic Laws mentioned above; Statutory rights, as set out in statutes and regulations; rights set by collective agreements and extension orders of collective agreements; and individual labour contracts. These legal sources are interpreted by the National Labour Court, which is the main judicial body developing labour and social security law. International standards, especially ILO conventions adopted by Israel, but also EU standards, are used by the government and courts as guidelines, even though they are not binding.

Early developments and The formative years

Israel is the only country we know of which had labour unions prior to industry. Jewish immigrants to Turkish occupied Palestine arrived in the late 19th century, early 20th century, to find an undeveloped land, with a small agricultural economy. In addition to forming agricultural communes – kibbutzim – they founded a union – the Jewish Worker’s Federation, known as the Histadrut – which then founded union controlled and owned factories and co-operatives, which provided work for union members. The Histadrut was the Jewish population’s tool for economic, social and employment development in the pre-state period. Its’ activities continued after the state was founded in 1948 and, as late as the early 1980’s Histadrut companies were about 25% of the Israeli economy.

The Histadrut was one of the most influential forces in pre-state Israel. After the state was founded in 1948, the Histadrut continued to play an important role, especially as an integral part of the labour movement, which formed the government coalition until 1977. This influence and the ideology of the labour movement resulted in the Knesset adopting a comprehensive system of protective labour legislation. The Histadrut supported labour legislation for all workers, not only its’ members. It also organized most Jewish workers in the pre-state period and both Jewish and Arab workers after the state was founded. As a result about 85% of the workforce was organized in the early period of the state and union density continued high until 1995. The Histadrut was a federation of labour which provided direct membership to blue collar and white collar unions, including professional unions. It also provided social services such as health-care, pensions, and insurance schemes, employment agencies, sports and cultural activities and senior citizen housing.

High union density resulted in collective agreements governing most workplaces. Moreover, the Histadrut preferred to keep the courts out of collective labour law, so that there was a model of state non-intervention in this area. The statutes governing collective labour law were the Collective Agreements Law - 1957 and the Settlement of Labour Disputes Law - 1957. Until the early 1970’s there were no limits on strikes and the law gave unions and strikers protection for strike activity.

By the early 1990’s union density had declined to about 60% of the work force. A major cause of further decline was that until 1995, union membership was a condition for eligibility for medical coverage. In January 1, 1995 this linkage was terminated by the National Compulsory Health Insurance Law, which guaranteed every resident medical coverage. Over night Histadrut membership declined from about 1,250,000 to 600,000. From this time on union density has been about 33%, with union density in the private sector declining to about 10-15%. In addition the Histadrut severed its’ link with the Labour Party, reducing its ability to influence labour legislation. Today the Histadrut has been renamed “The New Histadrut.” It power is mainly in the public sector but also has wide support from the low income workers. The Histadrut continues to control the workers’ pension funds, which have about 700,000 members. It also has begun to offer its affiliated unions and rank and file legal services. It is still the most prominent union in Israel, but there are important independent unions, such as The Grade School Teachers’ Union, the High School Teachers’ Union, the Doctors’ Union and the Leumit National General Union.

In its’ first decade as a State Israel adopted many protective labour statutes, using ILO conventions and Western standards as a guideline. The following laws were passed: Discharged Soldiers (Reinstatement in Employment), 5709-1949; The Hours of Work and Rest Law, 5711-1951; The Annual Leave Law, 5711-1951; Apprenticeship Law, 5713-1953; Protection of Youth Labour Law, 5713-1953; The Employment of Woman Law, 5714-1954; and The Wage Protection Law, 5718-1958. Among the main achievements of this period was the prohibiting of dismissing pregnant workers, which was strictly enforced. From the foundation of the state the existing Mandatory period work safety laws were modernized.

In the following period, between the late 1960’s and the early 1990’s, the Knesset expanded individual labour protection, adopted significant laws prohibiting discrimination at the work place and established the Labour Courts, by the following statutes: The Labour Courts Law, 5729-1969; The Work Safety Ordinance (New Version), 5730-1970; The Sick Pay Law, 5736-1976; The Minimum Wage Law, 5747-1987; Male and Female Workers (Equal Retirement Age) Law, 1987; The Employment (Equal Opportunities) Law, 5748-1988; Single Parent Family Law, 1992; Absence Because of a Child’s Sickness Law, 1993; Absence Because of a Parent’s Sickness Law, 1993.

Recent labour legislation, from 1995 to date, expanded equality at the workplace and attempted to protect labour-only contractual workers, workers in irregular work relationships and migrant workers. Such statutes included: Employment of Employees by Manpower Contractors Law, 1996; Amendment to the Foreign Workers (Prohibition of Unlawful Employment and Assurance of Fair Conditions) Law, 1991; Protection of Employees (Exposure of Offences of Unethical Conduct and Improper Administration) Law, 1997; The Prevention of Sexual Harassment Law, 5758-1998; Equal Rights for Persons With Disabilities Law, 1998; Absence Because of a Spouses Sickness Law, 1998 . Recently laws were passed concerning basic protections and labour rights, such as: The Advanced Notice of Discharge and Resignation Law, 2001 and The Notice of Basic Employment Terms Law, 2002.

From its’ first decade Israel adopted the progressive European social security model. The National Insurance Institute was founded in the 1950’s with basic branches of social welfare, such as worker’s compensation. Today this social security legislation encompasses the following benefits: maternity, disability, free burial, medical insurance, unemployment and minimum annual income.

In 1969 the Knesset passed the Labour Courts Law and thereby formed a separate judicial system dedicated to individual and collective labour disputes and issues. These Labour Courts have played a significant role in the development of labour and social security law in Israel.

Prior to the Labour Courts, disputes relating to labour and social security were litigated in the general judicial system or tribunals, which did not develop law relating to collective disputes and handed down few cases relating to labour law and social security. In the mid 1960’s the Histadrut and Manufacturers’ Association signed a collective agreement undertaking to request the Knesset to establish a labour court. At this time strikes were common, especially in the public sector and the employers and unions hoped that labour courts would reduce the number of industrial disputes. Among the purposes for establishing Labour Courts were: [1] to settle labour disputes by legal means instead of strikes, [2] to provide expertise in adjudicating labour and social security disputes, [3] to have courts with simple and easy to understand procedures, so that workers could represent themselves and [4] to be more expedient and efficient than regular courts. In a break from the general court system, in which judges make all decisions without juries, the Labour Courts have lay members, in equal numbers, one from labour and one from management, sitting with professional judges. Labour Courts were, therefore, regarded as a partnership between the State, unions and management.

The Labour Court System has a trial instance, consisting of five Regional Labour Courts, and an appeals instance, the National Labour Court, which sits in Jerusalem. The Regional Labour Court bench is composed of one professional judge and two lay members, one from labour and one from management. The National Labour Court sits with three professional judges and two lay members. In criminal cases there are no lay members and only the judges hear these cases. In national wide collective disputes the National Labour Court sits with three professional judges and four lay members.

The judges are appointed by the same committee which appoints general court judges; consisting of three Supreme Court justices, the Ministers of Justice and Labour, two members of the Bar Association and two Knesset members. The appointment is until compulsory retirement at the age of 70. Today there are 55 judges. The lay members are appointed by the Ministers of Justice and Labour for terms of three years.

Labour Courts jurisdiction is very broad and includes individual disputes between workers and employers, protective labour laws, collective disputes, disputes between a union and its members or an employer and his association, pension matters, workplace equality, administrative matters relating to workers, such as job tenders, occupational safety and health, employment agencies, protection for migrant workers, social security and the State medical insurance. With regard to tort actions, the Courts have jurisdiction over the following actions where they are related to a labour dispute: trespassing, breaching of statutory duty, and inducing the breach of a contract. Approximately 30% of the cases filed in the Labour Courts relate to social security. Labour Courts hear cases concerning workers’ compensation, unemployment insurance, disability benefits, maternity benefits, death benefits, guaranteed annual income, senior citizens pensions, and children’s benefits. The Labour Courts also hear matters concerning ratifying or canceling arbitration decisions.

In addition to being the appeal instance the National Labour Court also has original jurisdiction over nation wide strikes and collective disputes. Regional Labour courts receive about 90,000 cases a year and the National Labour Court receives about 2,000 a year. Judgments of the National Labour Court are not appealable; however, a party may petition the Supreme Court sitting as a High Court of Justice to hear petitions relating to constitutional issues or important labour law or general law matters. In practice the Supreme Court hands down one or two important judgments a year on labour or social security law matters.

Regarding criminal labour law cases, such as work safety, only judges sit. There is an appeal by right to the National Labour Court and by permission to the Supreme Court.

Procedural aspects are regulated by the special regulations for the Labour Courts and are much simpler and easier to understand than those of the general courts. Section 33 of the Labour Courts Law states that in any procedural matter not regulated by the law or its regulations, the Court shall decide according to what seems just and fair. Section 32 of the Labour Courts Law states that the courts are not bound to evidence rules. In practice, the basic principles of evidence apply in the Labour Courts, but the judges may be liberal in admitting evidence.

The Labour Courts are developing alternate dispute resolution (ADR) programs. Lay members do mediation and settled about 4,500 cases in 2001. All lay members acting as mediators are required to take mediation courses. About 400 cases were settled in 2001 by private mediators, to whom the courts referred the parties. The courts also referred parties to arbitration. Mediation is not compulsory, but actively encouraged by the courts.

The Labour Courts are developing a case management program, run by lawyers employed by the courts. Registrars and judges conduct pre-trial hearings to settle cases or prepare them for trial.

The National Labour Court created Israeli collective labour law. It also developed individual labour law and social security law. Only a few judgments of the Supreme Court were published until 1969 when the National Labour Court was establishedpublishes an annual volume each year and is beginning to publish two annual volumes. The Labour Courts have made significant contribution to the stabilization of labour relations and settlement of collective disputes thru negotiating and adjudication. Their most important role is to stop a strike or lockout and return the parties to the bargaining table, which is accomplished by the judge suggesting a temporary compromise or giving a court order. The Labour Courts also interpret collective agreements and decide cases involving workers’ rights when there is a transfer of ownership, privatization, collective dismissals, or violation of freedom of association.

A. Legislative reform

Recent statutes have mainly related to current problems in the Israeli labour market. Such problems are labour-only employment, irregular/non-traditional work relationships and migrant workers. Other legislation continues the policy of ensuring equality at the work place. Finally, a few laws have been passed expanding general protective labour legislation.

i. Labor- only -contracting

It is estimated that irregular and labour-only work relationships currently comprise 10% of the workforce. About a third of government workers are manpower agency employees. Such triangular work relationships are expanding. There is also a trend towards outsourcing. These models created problems concerning employment conditions and job security for workers.

Originally Labour Court cases held that the manpower agency was the employer of a worker in a triangular work relation, the receiver of work having no contractual relationship with this worker. Since the mid 1990’s the National Labour Court has changed this policy and held that in certain circumstance the manpower agency and work receiver were joint employers, responsible jointly or separately to the worker. The National Labour Court said that “formal” contractual relationships in triangular work relationships should not be the only or main factor in determining whether the work receiver is responsible to the worker. Social policy considerations were given a significant role in determining the obligations of the work receiver. The real roles of each party were given weight, with the court examining who actually received the worker’s work and not only who the worker had a labour contract with. For example, in a recent judgment handed down by the Tel-Aviv Regional Labour Court, it was decided that stenographers employed by the court system for long periods of time have become government employees. The National Labour Court and the Supreme Court also expanded the type of people doing work who were defined as “workers”, thereby extending the scope of protective labour legislation.

As a result of Histadrut and public pressure the Knesset passed in 1996 the Employment by Labour-Only-Contracting Law, which has thereafter been amended. Regulations were issued to make the law more effective. This made into law some of the legal theories which the National Labour Court had developed and enumerated for the purpose of futhering rights of workers in triangular work relationships. The law requires labour-only contractors to obtain a license and deposit a substantial sum of money as a bond to ensure they can fulfill their obligations to their workers. According to this law contract-only workers are entitled to most of the terms granted to workers at their workplace by the collective agreements applying at the workplace. It did not, however, include protection from dismissal.

This law was criticized by the unions and social interest groups for not granting workers adequate protections. In 2000, the Knesset revised the law, significantly improving protections granted to employees in these irregular work relationships. The triangular relationship is now limited to a nine-month period after which the worker becomes an employee of the employer at whose workplace he is working. Also, the contracted employee is entitled to the protection of either the collective agreement applying at his workplace or a collective agreement with the labour-only contractor.

This reform went into effect as of the 28.7.2001. There has been speculation as to the implications that this law will now have on the workforce in general and on the public sector in particular. The nine month period was recently extended a few months and as this period ends there is employer pressure for another extension. A heated public debate is taking place on this issue and the movement for improvement in labour-only employment conditions has played a significant part in the Histadrut’s public campaign both against the government, employer organizations and competing unions.

ii. Migrant workers

In the late 1990’s migrant workers increased from an insignificant part of the workforce, less than 1%, to about 10% of the workforce. 3 Approximately half of these workers entered Israel illegally and have no work permit. According to statutes and case law, migrant workers are entitled to all the protective labour law rights, such as minimum wages, hours of work, severance pay and vacations. However, they have difficulty achieving these rights in the courts because of a language problem, unfamiliarity with Israel law and courts and lack of union or legal representation.

In 1991 the Knesset passed the Foreign Workers’ Law (Unlawful Employment and the Guarantee of Decent Conditions), which was amended in 2000. The purpose of this law is to guarantee that migrant workers obtain their rights under protective labour legislation and to compel employers to provide migrant employees with decent employment conditions, Employers are obligated to provide the employee with a written contract specifying the precise employment terms and conditions. Limits were placed on the expenses employers can compel workers to pay for housing. Employers are required to contribute a percentage of the migrant worker’s wages to a government fund which will grant them certain social benefits, including social welfare benefits.. The law encourages employers to sign collective agreements regulating working conditions of migrant workers.

iii. Freedom of association

Recent National Labour Court judgments guarantee workers’ right to organize and prohibit an employer from dismissing striking workers. Such protection had not been granted by statute. These decisions were based upon the constitutional freedom of association. Where a collective agreement existed and the employer attempted to oust the union or dismiss workers for participating in a strike the court based its judgment upon the long term obligation to maintain a collective relationship in good faith. After these decisions the Knesset amended the Settlement of Labour Disputes Law and guaranteed these protections by statute.

iv. Expanding the definition of worker

In judgments handed down in late 2001 and 2002 the National Labour Court held that certain freelancers are workers and entitled to protective labour law rights, if the purpose of such laws is applicable to their situations. The most important of these judgments is Tzadka v. Gallai Tzahal, the Army Radio Station. 4

Other recent National Labour Court decisions held that work performers, defined as “independents” in their contracts for services, were nevertheless workers, because they were an integral part of the work receiver’s business and did not conduct private businesses of their own. This expanded the existing integration test and multiple factor test used to determine who is a worker.

These judgments also dealt with the question of what benefits the person who was considered an independent but became an employee by court judgment was entitled to. The general rule is that he or she is entitled to all rights granted by protective labour law, which are to be calculated at the salary which would have been received if he or she had been defined as a worker. In general there was to be no restitution, ie. the payments received during the period the worker was considered an independent, were not to be recalculated so that the worker would return the excess funds paid because he or she was an independent. There were, however, exceptions to this rule, when the worker compelled the employer to enter into the contract for service and refused to work as an employee; and when it was stated in the contract for services that the payments would be recalculated if the court determined he was an employee.5

v. Workers’ rights on transfer of enterprise –

While there are no laws regulating workers’ rights upon transfer of enterprise or ownership the National Labour Court has ruled that the union must be informed of the transaction, the employer must negotiate with the union on this matter and workers’ have a certain quasi-property right in their workplace. A recent judgment dealt with workers’ rights when their workplace is privatized.

There is no labour law governing individual labour contracts and, therefore, the Contracts (General Part) Law, 1973 and the Contracts Law (Remedies for Breach of Contract), 1970 apply to labour contracts, as they apply to general contracts. Thus, such issues as how a contract is formed, that a contract need not be in writing, remedies for violation of contract and the good faith performance requirement are determined by general contract law.

The National Labour Court has developed a body of case law suitable to the particular characteristics of the labour contract. In doing so the court took into account the imbalance of power between the worker and the employer. Such case law has developed the special obligations and rights concerning the good faith requirement for the negotiation and performance of labour contracts. The employment contract may be either written or oral. 7 The Supreme Court held that an employer cannot unilaterally change important terms and conditions of the employment contract. 8

One particularly disputed issue was whether the court could reinstate an employee discharged in violation of his labour contract or collective agreement. In the 1970’s the National Labour Court decided in the affirmative and was overruled by the Supreme Court. In the 1990’s the National Labour Court again ruled that specific performance was an acceptable remedy and the Supreme Court has not overruled these judgments.

Another recent development is the view of certain Supreme Court justices that an employee – employer relationship can exist without an employment contract. The Chief Justice indicated, obiter dictum, that there may be a need to rethink the contractual requirement for establishing an employment relationship. 9 Another Supreme Court judgment held that a prisoner could be considered a worker in certain circumstances, without specifying which and denied the petition for minimum wages.10

Employment contracts may be for fixed or unlimited periods of time. If an employment contract specifies a fixed period of employment, the contractual relationship is automatically terminated at the end of this period, without being considered a resignation or a dismissal.

An employment contract, which does not specify a fixed period of duration, is considered to be for an unlimited period of time, but can be terminated by notice of either party. However, in the organized sector of the work force collective agreements which give workers tenure limit the employers’ ability to discharge and end the employment contract. Other limitations on terminating an individual labour contract are the duty that it must be done in good faith and not for a discriminatory reason. In the public sector civil servant laws limit the government’s ability to civil servants.

As mentioned above, Israeli labour law joint employers in certain instances of triangular work relationships. In such cases a labour contract of employment is deemed to exist between the manpower company and the worker and between the labour receiver and the worker. Sometimes they are considered joint employers.

Trial periods

Israeli statutes do not relate to trial periods for individual labour contracts. However, collective agreements generally establish a trial period, after which the worker receives tenure. Trial periods range between 6 months and 5 years. Often they are 6 to 12 months, with the employer empowered to extend them for various time periods. Such tenure limits the employers’ power to discharge the worker, which can only be done by following a procedure set out in the collective agreement. Government workers receive tenure according to the requirements set out in the Civil Servants Law (Appointments) and the Civil Service Rules, which are determined by the Civil Service Department of the government.

An employer may dismiss the worker during the trial period or at its’ conclusion, depending on the contract terms. This must be done in good faith. When the dismissal is unfair or causes the worker unusual injury the court may award him compensation of a month or two salary.

Under the Collective Agreements Law the labour contract is suspended if a worker participates in a strike or is locked out. Therefore, the employee does not violate his contractual obligations to his employer when he participates in a strike. Likewise, lockouts do not terminate the employment relationship.

When the labour contract is suspended by worker participation in a strike, the employer is not required to pay wages, since no work has been performed. National Labor Court judgments have held that an employer is not required to pay wages when the labour contract is suspended because of a strike.

Various statutes prohibit the employer from discharging a worker for discriminatory reasons, such as gender, race, religion, age, sexual preference and disability. 11 If an employee has revealed corruption in the workplace, his/her termination is limited as well.12

Since 1954 Section 9 of the Employment of Women Law has prohibited discharge of pregnant workers. Discharge shortly after the women worker has given birth is also restricted. The statute does, however, allow the Minister of Labour to permit discharge of pregnant women if he is convinced that the discharge is unrelated to the pregnancy.

Collective agreements regulate and limit the employers’ ability to discharge workers. Grievance procedures and special dismissal procedures enable the union to represent the workers’ interest and negotiate the employers’ intent to make an individual or collective dismissal. When agreement is not reached the dispute is often settled in arbitration. Some collective agreements grant the employer the prerogative to dismiss a worker after the consultation and negotiation requirements have been met.

Two thirds of the work force, which is unorganized and not protected by collective agreements, has limited protection against dismissal. If the dismissal is not discriminatory the only protection the worker has is his individual labour contract with its good faith requirement. The labour contract generally allows dismissal if advance notice is given or at the conclusion of the contract term. The National Labour Court has begun to develop case law which expands the good faith requirement, holding that the dismissal cannot be arbitrary and the employee must be informed of the reasons for his dismissal and given a fair hearing and chance to relate to these reasons.

The labour contract can, of course, be terminated by the worker resigning, subject to the requirement to give advance notice. It may also be terminated when the worker retires. Most collective agreements compel retirement at the age of 65.

iv. Advance notice of dismissal or resignation

The Advanced Notice of Discharge or Resignation Law, 2001, requires the employer and worker to give advanced notice of discharge and resignation. The advance notice period is one day for every month worked during the first year of employment, 14 days during the second year, 21 days during the third year and 1 month after 3 years of work. If an employer or worker terminates the contract of employment without giving advanced notice the law requires him to pay the other party a sum equivalent to one month's salary. The employer is entitled to terminate the employment relationship when notice is given if he pays the worker the equivalent of one month's salary. If the worker is discharged for a serious disciplinary violation the employer is not required to give advance notice or pay in lieu thereof. Prior to this law many collective agreements required advanced notice of discharge or resignation. This was so prevalent that the National Labour Court declared it to be a custom, which became a contractual obligation and, therefore, obligated employers to give advance notice, during which workers continued to work, and received their salary, or alternatively the employer could immediately terminate the employment relationship and pay the worker one month's salary.

v. Severance pay

Under the Severance Pay Law, 1963 a discharged worker is entitled to severance pay of one months’ salary for each year worked. Such severance pay can be reduced or denied when the worker is discharged for a serious disciplinary violation.

When the worker resigns he is not entitled to severance pay, unless he meets one of the specific provisions in the statute, such as resignation because of giving birth, serious illness, or a significant worsening of employment conditions. When a worker dies his dependant survivors are entitled to severance pay. A worker is entitled to severance pay when his employer dies.

When a collective agreement requires the employer to contribute to a pension plan the worker is not entitled to severance pay.

This law’s purpose is unclear. Severance pay can be seen as giving the worker funds to live on until he finds another job, or as payment for his contribution to the workplace, or to live on when retired or to make it economically not worthwhile to dismiss the employee or for him to quit. These are contradictory purposes and some legal scholars have criticized the differentiation between the discharged worker and those who quit. There have been movements to replace the Severance Pay law with a compulsory pension law covering all workers.

vi. State employees

Civil Service Laws and rules regulate the discharge of civil servants. These laws and collective agreements create a complex procedure for dismissing government employees, which greatly limit the dismissal option. The dismissal of state employees for disciplinary reasons is regulated by the State Employees (Discipline) Law, 1970. Serious discipline of civil servants is governed by a special disciplinary tribunal, whose judgments may be appealed to the Supreme Court..

Israeli legislation does not deal with collective dismissals. Collective agreements generally require the employer to inform, consult and negotiate with the union prior to making a collective dismissal. The common procedure is that the employer determines the need for a collective dismissal and the number of workers to be dismissed. The employer must then submit a list of the candidates for dismissal to the union, who can suggest an alternative list. If there is no negotiated agreement an arbitrator determines who shall be dismissed. Under some collective agreements the arbitrator also determines the number of workers to be dismissed. Collective dismissals are uncommon and generally involve limited numbers of workers. When an employer decides to make a collective dismissal there are often strikes and petitions to the Labour Courts by the union.

Under Israeli contract law the general remedy for breach of contract is compensation, but the court may also grant specific performance or rescission. According to National Labour Court case law the preferred remedy for breach of an individual labour contract is damages but, when special circumstances warrant, the court may return the discharged worker to his workplace. As mentioned above the specific performance remedy has been a controversial issue with a serious disagreement in the 1970’s between the National Labour Court and the Supreme Court. The former held that it had the power to reinstate a wrongfully discharged worker while the Supreme Court said this was not possible because of a provision in the Contracts (General Part) Law prohibiting specific performance of personal work or service contracts. Labour Court judgments interpret “personal work” narrowly, not including workers who have no “personal” relationship with their employer. Wrongful termination in the public sector has been viewed as allowing reinstatement even when dealing with personal work. In the 1990’s the Supreme Court indicated in a number of